Long Term Care

According to the U.S. Department of Health and Human Services, 70% of people over age 65 will require long-term care. The U.S. Census (2000) reports that 20% of Japanese Americans are 65 years or older, which makes us the most aged ethnic group in the nation. Average cost of a nursing home stay and in-home care in 2008 were $68,000 per year (semi-private room) and $18,000 per year (3 times a week), respectively. However, 65% of Californians underestimate the cost of long term-care or have not considered the financial impact such care would have on their families.

What is long-term care?

Long-term care describes a number of care options for individuals who have chronic illnesses or are recovering from hospitalization. It is often thought of as care for seniors only, but it is also for anyone who has a chronic disability such as a 50-year-old with a stroke or head trauma or an 18-year-old who has a developmental disability.

Long-term care can include assistance with daily activities such as bathing, dressing and eating. This type of care is provided by family members or home care or nurse aides in the home or in an assisted living facilities. Long-term care is also provided to those who have had a recent illness or hospitalization for a stroke or hip fracture. Licensed nurses and physicians provide this type of care in skilled nursing facilities or in the home through home health agencies. Long term care can be required by persons with physical impairments or those with cognitive impairments such as Alzheimer’s disease.

The type of long term care is usually selected based on the needs and desires of the person needing the care and the care recipient’s or family’s ability to pay for care. The annual cost of a private room in a nursing home can average roughly $76,320 or $68,760 for a semi-private room (MetLife 2008 Survey). Care at home or in an assisted living facility can cost just as much as in a skilled nursing facility depending on the services needed and the location and type of facility.

What public programs are available to pay for long-term care?

Medi-Cal

The Medi-Cal program in California is the same as the Medicaid program nationally. The Medi-Cal program is a joint federal-state funded program, which pays for nursing home and in-home supportive services for those who meet the income and asset tests. There are separate rules for single people regarding the level of resources they can have and special rules for couples designed to prevent impoverishment of one spouse when the other spouse goes into a nursing home. You can keep your home when applying for Medi-Cal and it will not be included as a resource on your application. Medi-Cal pays for the majority of the nursing home costs in California. Another type of care that is available to individuals that meet the eligibility test is in-home supportive services. This is for care for the blind, disabled or seniors. Services include domestic help, meal preparation, and non-medical personal care. For specific eligibility requirements call your county Department of Social Services.

Medicare

There is a lot of confusion in the community regarding Medicare paying for long-term care. Medicare does not pay for long-term care or what is called “custodial care” but does pay for “skilled” care in a nursing facility. This type of care is considered care that is required to return an individual to a previous level of functioning or independence. As such it is usually utilized after someone has been in the hospital for an illness or condition such as a stroke or hip fracture. Once someone has returned to as near the previous level of independence as possible, they will be shifted to another source of payment. The other difference between Medicare and Medi-Cal is that Medicare is not based on the amount of money or assets someone has (means test) while Medi-Cal is based on a means test.

What is long-term care insurance?

Long-term care insurance is a product that helps you pay for care in nursing homes, in assisted living facilities, at home, or in adult day care. Generally speaking, the insurance premium depends on what age you purchase the insurance, the level and length of the benefit and the services it covers. Many have found the cost to be expensive. Some people are too old or have pre-existing health conditions that prohibit their purchasing of this insurance. Some people may not be able to afford the insurance once a spouse dies or if premiums increase over time. Some people are able to purchase this type of insurance through their employer.“California Partnership” policies allow you to keep a certain portion of your assets if you later qualify for Medi-Cal.

What are other financing options for long-term care?

Self-Pay

Some individuals set aside personal savings and other assets to supplement the donated care received from family and friends. For those who can arrange for this type of financing of long-term care, the major advantage is that the individual retains maximum flexibility and choice in the types of services received. The risk is the depletion of personal assets as the length of the impairment may be unknown.

Care Donated by Friends and Family

The Congressional Budget Office recognizes that one of the most common ways that families manage the long-term care of a family member is through care donated by family and friends. Many families “patch” together plans for care that include donated care with care management and care assistance through different agencies or insurance carriers like SCAN. A number of resources are also available through the local caregiver resource centers. One of the challenges to managing care in this manner is the recognition by family members when the appropriate time to ask for help arrives. More often than not, families try to manage care to the breaking point before seeking assistance. We encourage families to attend our caregivers workshops to learn more about care giving at home and to call us to learn more about care options both at Keiro and in the community. Our hope is that we can make the care situation more manageable and learning about your options less stressful.

Life Insurance

These policies are sometimes sold in combination with long-term care benefits or have a rider for long-term care. Essentially, the death benefit is reduced by the long-term care benefits paid out while the policyholder is still living. These policies can be paid for through a one-time payment or monthly premiums. These policies vary and utilize complex methods to pay out benefits. Please consult your tax attorney, accountant or trusted financial advisor for more information.

Viatical or Life Settlements

These are contracts that pay you a discounted price for your “equity” in life insurance policies you own. If you meet the eligibility criteria for a settlement like this, you could use the proceeds to pay for long-term care. Be sure to have your attorney review any offer prior to accepting the offer.

Home Equity Conversions or Reverse Mortgages

Much has been said about the ability to reverse mortgage your home to pay for living expenses or long-term care needs. There are various types of home equity conversion loans. Some are federally insured, others are not. Some may affect your right to continue receiving public benefits like Medi-Cal or supplemental security income (SSI). Some could affect you taxable income. Please see your attorney or accountant to carefully review any contracts before considering this approach.

Reference:

The MetLife Market Survey of Nursing Home and Assisted Living Costs October 2008

HYPERLINK “http://www.metlife.com/assets/cao/mmi/publications/studies/mmi-studies-2008-nhal-costs.pdf” http://www.metlife.com/assets/cao/mmi/publications/studies/mmi-studies-2008-nhal-costs.pdf (use friendly URL)

Where can I get more information about long-term care?

There are a number of ways to pay for long-term care. There is no single best answer. Much depends on an individual’s circumstances. It is crucial to get advice from your accountant, financial planner or elder law attorney if you have questions regarding this topic. You can also get free, objective counseling from your state funded Health Insurance Counseling and Advocacy Program (HICAP). Appointments can be made in your community by calling (800) 434-0222. The Institute for Healthy Aging at Keiro provides in-kind HICAP volunteers in Orange County through the Council on Aging-Orange County. To speak with or make an appointment with a Keiro HICAP counselor call (323) 980-2353.